DOE official highlights Appalachia’s role in US energy renaissance

Appalachian oil and gas activities are continuing to contribute to the US energy renaissance not only in terms of rising tight-gas production but also by improving petrochemical opportunities, Asst. US Energy Secretary for Fossil Energy Steven Winberg said on Aug. 6.

“A decade ago, the storyline was that we were running out of recoverable oil, and we would increasingly become a net importer of natural gas,” Winberg told the Independent Oil & Gas Association of West Virginia during its 2019 Summer Meeting at White Sulfur Springs. “But then came the shale energy revolution, which rewrote that storyline and transformed energy development here in West Virginia, the broader Appalachian region, and other parts of the country.”

Today, the US is the world’s top oil and gas producer and a net exporter of gas, Winberg said. The US Energy Information Administration also projects that the country will become a net energy exporter this year, which last occurred in 1953, he said.

“I think you’d have to go all the way back to Spindletop in 1901, which launched the Texas oil boom, to find a US energy development comparable in its impacts to the shale revolution,” Winberg stated.

That revolution’s impacts are obvious across the Marcellus and Utica plays in Appalachia, which already are responsible for 85% of the growth in US gas production over the past decade “and already account for right at a third of US production today,” he said. That share could reach 45% by 2040, he said.

Strong oil, gas R&D

Noting there’s no doubt that DOE has a strong oil and gas research and development track record, Winberg said it now is applying data science and machine learning tools to help make it possible to process and interpret complex data streams in real time and increase production of unconventional oil and gas.

“We believe the development and integration of these tools—coupled with high-performance computing—have the potential to usher in a paradigm shift from energy production and development to systems operations,” Winberg said. “Just in the past couple of months, we’ve invested nearly $85 million in projects to move us closer to this goal.”

Specifically, Winberg said, DOE selected five projects in July to receive $40 million to help advance enhanced oil recovery in unconventional reservoirs. “And in June, we announced more than $44 million in funding for a dozen projects to enhance the characterization and improve the recovery efficiency of emerging unconventional oil and gas reservoirs,” he said.

DOE also is pursuing data science and management tools to improve operational reliability and reduce the loss from gas gathering, transmission, distribution, and storage facilities, he said. “We’re also beginning to look at cybersecurity, as well as continuing our focus on reducing methane losses. And we have several R&D pathways to help us meet these goals,” Winberg said.

“A lot of important work on resource development, energy-water challenges, and infrastructure will expand this era of oil and natural gas abundance, which is vital to our energy security and economic growth—and to planning long-lived energy infrastructure development,” he said. “And, increasingly, coproduced natural gas liquids are becoming an important part of this story.”

Similar petrochemical potential

Since a lot of Appalachian gas is “wet” with substantial volumes of NGLs, the region also is poised to become an important US petrochemical region, Winberg said. “This is one of those once-in-a-lifetime opportunities—and if Appalachia works together, every person in this room will be a witness to an Appalachian Petrochemical Renaissance on a scale that we could scarcely have imagined just a decade ago,” he said.

“This renaissance has the potential to create more than 100,000 new jobs in the region, generate tens-of-billions in revenue annually, reinvigorate regional manufacturing, and enhance our national energy security,” Winberg said.

The concept of a strong Appalachian petrochemical industry is hardly new, since “this is where it all began” when Union Carbide constructed America’s first commercial ethane cracker in Clendenin, W.Va., in 1920, he noted.

“Today, the Marcellus and Utica shale reserves are within a day’s drive to 70% of the country’s polyethylene market, meaning that supplies and the market are closer than ever,” Winberg said. “And nearly a third of US manufacturing involving petrochemicals is within about 300 miles of Morgantown. This base creates $300 billion in revenue, employs 900,000 workers, and supports 7,500 businesses, and it is positioned to grow.”

Winberg noted that in a 2018 report DOE delivered to Congress, “Appalachia, with its abundant resources upstream and extensive downstream industrial activity—could offer a highly competitive advantage and help the US gain global petrochemical market share.” It also could move more US petrochemical production capacity away from the Gulf Coast where it now is heavily concentrated and which is vulnerable to disruptions from hurricanes and other severe weather, Winberg said.